You’ve found your dream home. You’ve made an offer and it has been accepted. Now you’re just a few days out from the closing. Then the call comes in. For whatever reason, your financing didn’t go through. Now it looks like the house you’ve always wanted is lost! What can you do if your financing falls through at the last minute?
First of all, do everything you can to make sure you’re never in this position. This is one of the reasons why many realtors suggest you get pre-approved. While this doesn’t mean you’re 100% guaranteed to get a home loan, it does mean the lender who pre-qualifies you will have a chance to look over your credit history and your finances. If there’s anything there that sticks out, he will tell you about it. This gives you a chance to correct the issue or at least find a lender willing to work around it.
Next, stop freaking out and take a deep breath. Just because your financing has fallen through doesn’t mean you’re going to lose the house. Chances are, you’ll be aware of difficulties before you get to the closing, so there’s time to find a contingency plan. The first thing to do is find out why you lost your financing. It may have nothing to do with you—sometimes, it’s because the lender has gone out of business or something odd like that. Other times, it may be because your credit score has suddenly changed or that the property’s appraisal didn’t meet the purchase price.
Once you know what the issue is, you can sit down with your realtor and try to find a fix. If the problem was on the lender’s end, it’s time to quickly find replacement financing. This is probably the easiest fix since the trouble had nothing to do with your finances or credit. If the problem is the appraisal, then you’ll have to talk to the seller. Try to get them to change the purchase price. If they won’t, they will lose the sale, and that may be enough incentive to get them to lower the price.
If the problem is your down payment funds, see if you qualify for any Down Payment Assistance Programs. Otherwise, you may need to see if you can borrow money from family members or from your retirement.
Another issue that can crop up is a change in your credit score. If that’s the problem, pull your credit report to make certain nothing fraudulent has appeared. If it has, take immediate steps to have your report corrected.